New research has revealed that families are paying up to $1.3 million more for homes inside popular public school catchments in Sydney and Melbourne.

The analysis from Cotality compared property values inside those sought-after catchments with comparable homes outside those zones but in the same suburb.

The hefty premium for homes inside the catchment zone was confirmed – but with the catch that the properties don’t always deliver on longer-term capital growth.

“In some of the most in-demand school zones, families are paying hundreds of thousands – and in one case more than a million dollars – more for a house compared to similar houses outside the boundary,” Cotality head of research Eliza Owen said.

The largest price gap was seen in Sydney’s leafy North Shore, where homes in the combined catchments of Killara High, Willoughby Girls and Lindfield Learning Village held a median value nearly $1.3 million (or 39.8 per cent) above homes nearby but outside the catchment.

Despite this, houses in the catchment recorded lower long-term growth of 126 per cent over the past 15 years, compared to 150.3 per cent in neighbouring markets.

In Melbourne, the premium for homes in the catchments of Princes Hill and University High School reached $357,000, though capital growth was again weaker than surrounding suburbs – 82.6 per cent compared to 106.1 per cent over 15 years.

Of the nine school catchment clusters analysed across Sydney and Melbourne, seven had higher median house values compared to out-of-catchment homes. However, six of these also recorded lower capital growth over the past 15 years.

“These premiums may reflect the value placed on getting into top public schools, but it could also reflect an array of other factors like proximity to train stations, or the high incomes of those living inside the catchment area,” Owen said.

“As affordability has worsened in many good school catchment areas, this may have contributed to a spill-over in demand outside of the zones, leading to lower total capital growth. In many cases, that means the premium has trended lower over time.”

And house prices in some popular school catchment zones did not command a premium at all.

Cotality found the higher purchase price in many catchments could represent a saving for some families, however, compared to paying for a private education.

According to Futurity Invest, the average cost of 13 years of private education in Australia was estimated at $349,000 in 2022, though that was significantly higher in Sydney and Melbourne.

“In six of the nine regions we analysed, the house price premium within public school zones was at least $100,000,” Owen said.

“While that’s a significant upfront cost, it could end up saving families money when compared to paying for private schooling over many years.”

Additionally, school fees are likelier to rise over the years, while mortgage payments can decrease in real terms due to inflation.